Affiliated Computer Subpoenaed Over Option Grants

The move follows news of an SEC probe.
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Affiliated Computer Services

(ACS)

has received a grand jury subpoena for documents relating to its granting of stock options, the company revealed on Thursday.

The U.S. District Court for the Southern District of New York requested that ACS hand over documents related to stock options granted from 1998 to the present.

Shares of the IT services firm slipped 2.3%, or $1.21 to $51.72, in midday trading.

Last week, ACS said in an 8-K filing that the

Securities and Exchange Commission

is

investigating the company for backdating stock option grants for executives. The company said in the filing that it did not believe executives intentionally backdated stock-option grants to make money.

ACS said that in its usual practice for granting stock options, the compensation committee would approve the grants through "unanimous written consents with specified effective dates that generally preceded the date" on which approval had been given by the committee.

"The company has determined ... that the proper accounting measurement date for stock option awards cannot precede the date on which the grants were approved through the execution of written consents or through a valid meeting of the applicable compensation committee," according to a May 10 filing.

The company said it is revising its procedures so all future stock options grants are approved by the compensation committee in formal meetings.

ACS said it was cooperating with the SEC investigation.

In addition, ACS said in Thursday's filing that shareholders filed a lawsuit against ACS CEO Mark King and former ACS CEO Jeff Rich for breaching "short swing profit rules" of Section 16(b) of the SEC Act of 1934, related to stock option grants.

ACS said it would defend the suit.